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Philip Kotler Jeddah, Saudi Arabia, October 10, 2010
Winning in Hard Times
Session One. How to meet today’s and tomorrow’s challenges with Marketing 3.0. Session Two. How to increase your brand power. Session Three. How to manage sales and marketing.
Session 1. Using Marketing 3.0 to Meet the New Challenges
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• On a scale of 1 to 3 (3 = highest). How much is this a challenge to your company? Distrust of business Globalization • • Economic recession and turbulence • Technological advances and disruptions • Environmentalism and climate change • The 4/7/12 new social media .
Stage 3. They pursue aggressively wild growth. They ignore early warning signs of failure 4. Their failure becomes very – – Stage 4/7/12 – . Stage 2. Successful companies get arrogant and think they can do many things.• James Collins wrote in How the Mighty Fall : – Is Your Company Going to Fail? Signs to Watch for Stage 1.
Economic Recession and Turbulence • Distinguish between: – Recession Disruption Turbulence Larger reserves Shared investments Early warning systems Scenario planning – – • Risk reduction strategies – – – 4/7/12 – .
• .Disruptive Technologies • OLD • NEW Digital photography Mobile telephones On-line retailing Distance education Digital printing Outpatient clinics Endoscopic surgery Angioplasty • Photographic film Wired telephones Store retailing Classroom education Offset printing General hospitals Open surgery Cardiac bypass surgery • • • • • • • • • • • • • • • Unmanned aircraft • Source: Clayton M. Christensen. xxix. The Innovator’s Manned fighters 4/7/12 • On-line stock brokerage Dilemma. p.
Tomorrow Will Be Different Yesterday Ford Department stores Digital Equipment Delta IBM At&T Sony DiskMan Source: Clayton Christensen 4/7/12 Today Toyota Wal-Mart Dell Southwest. Ryan Air Microsoft Cingular Apple iPod Tomorrow Cherry Internet retail RIM Blackberry SkyWest. Air taxis Linux Skype Cell Phones .
set of institutions.Consider How Marketing Has Changed • Old definition of marketing – “Act or practice of advertising and selling a product” (Random House Webster Dictionary of American English 1997) • New definition of marketing “Marketing is the activity. 4/7/12 – . communicating. and processes for creating.
4/7/12 • Then marketing grew as a separate department responsible .Sales Precedes Marketing • In the beginning there was sales. • Marketing appeared later to help sales people: – By using marketing research to size and segment the market By using communications to build the brand and develop collateral materials By finding leads through direct marketing and trade shows – – • Marketing was originally located in the sales department.
(the idea of setting up selling systems involving distribution. (the idea of integrating the marketing tools). 4P stage.Stages in the Development of the Marketing Discipline 1. Customer Relationship stage. 2. (the idea of refining the market targets and branding). (the idea of building a loyal customer base). sales people and advertising). 3. 4. 4/7/12 . Selling stage. STP stage.
and Philosophy • CCDVTP • R -> STP -> MM -> I -> C • CIB 4/7/12 . Process.Marketing Objective.
There is a strong shift to store brands and sub-brands.. Social media networks will play an increasingly influential role in shaping brand evaluations . This is a VICIOUS Traditional media such as TV 30second spots. This will leave the company with fewer resources to 4/7/12 prop up demand. advertising and consumer promotion for brand building and ultimately reduce brand equity. in its wish to spend less. This will leave less money for marketing research. This means that top brands are overvalued and there may be a brand bubble. newspapers. will be less inclined to pay higher prices for top brands where the quality differences are minimal. Investors will then downgrade the stock.MARKETING will be less effective in the next few years MARKETING’S RECENT LOSS OF EFFECTIVENESS Marketing budgets will be lower Companies will want marketers to do more with less DISTRIBUTO RS TRADITIONAL MEDIA COMPETITIO N PUBLIC SOCIAL MEDIA NETWORKS § § § § DISTRIBUTORS will § demand more TRADE PROMOTION. are growing LESS EFFECTIVE § Categories are so crowded with competitors that heavy price cutting will be UNAVOIDABLE § The public. etc.
checking manufacturing schedules. securing approvals on label artwork. SOLUT ION TWO MARKETING DEPARTMENT…!!! Downstrea m Marketing Markets TODAY’s Product Upstream Marketing Create TOMORROW’s Product 4/7/12 . and doing routine analysis. Company marketers spend only 15-30% of their time doing true marketing activities. Strategic marketing is missing in many marketing departments.STRATEGIC vs TACTICAL MARKETING Most marketing departments are engaged in brand-maintenance instead of brand-building. Strategic marketing requires taking a 3-5 year view of the business. The rest of the time is spent on forecasting volume.
0 Consumers play the key role of creating the value through co-creation of product and service . New York: Portfolio. Brand Hijack: Marketing without Marketing.0 Managers listened to the consumers’ voices to understand their minds and capture market 4/7/12 insights Marketing 3. Marketers have Lessening Influence in Shaping Their Brand Image Person-to-person conversations about many products can exceed the amount of communication under the company’s control. 2005 FOUR POSSIBILITIES Everyone is talking negatively about the company There is no talk about the company The talk is a mix of good and bad comments Virtually all the talk is favorable Marketing 2. see Alex Wipperfürth.The Age of Social Media. Thus a brand can be hijacked.
EVOLUTION OF MANAGEMENT THINKING Product Manage ment Custom er Manage ment Brand Manag ement Value Mana geme nt 1950 s– 1960 s 4/7/12 1970 s– 1980 s 1990 s– 2000 s 201 0s – 202 0s .
Promotion) The Four Ps Brand Building TODA Y’S MARK ETIN G CONC EPT (Segmentation. Targeting. Price. Place.THE FUTURE OF MARKETING THE DISCIPLINES OF MARKETING PRODUCT MANAGEME NT CUSTOMER MANAGEME NT BRAND MANAGEME NT 4/7/12 (Product. and Positioning) CO-CREATION The STP COMMUNITIZATI ON FUTU RE MARK ETIN G CONC EPTS CHARACTER BUILDING .
New York: McGraw-Hill. 4/7/12 . consumers. 2008 Three key processes of CO-CREATION: 1 A company creates a “platform”. and channel partners interconnected in a global network of innovation C. Krishnan.S.K. 3 Ask for consumer feedback and enrich the platform by incorporating all the customization efforts made by the network of consumers. Prahalad and M. suppliers. The New Age of Innovation: Driving Co-created Value Through Global Networks. 2 Individual consumers customize the platform to match their own unique identity.COCREATION Evolution of a company’s relationship to its customers: Make a Product with minimal customer testing Refine the Product with extensive customer input and testing Invite Customers to provide ideas and co-create The new ways of creating product and experience through collaboration of companies.
0 MARKETING MARKETING MARKETING 1.MARKETING 1. Emotional. and Spiritual Many-to-Many Collaboration 4/7/12 . Values Functional. and Spirit Values Corporate .0 Productcentric Marketing Customeroriented Marketing Satisfy and retain the consumers Information Technology Smarter Consumer with Mind and Heart Differentiation Corporate and Product Positioning Functional and Emotional One-to-One Relationship 2. Heart.0 vs MARKETING 2. Vision.0 3.0 Value-driven Marketing Objective Enabling Forces How companies see the market Key marketing concept Company marketing guidelines Value propositions Interaction with consumers Sell products Industrial Revolution Mass Buyers with Physical Needs Product development Product specification Functional One-to-Many Transaction Make the world a better place Social Media Whole Human with Mind.0 vs MARKETING 3.
Values-Based Matrix Model Heart Mind S pirit INDIV IDUAL COMPANY COMPANY Mission ( hy) W Deliver S IS ACT AT F ION Realize AS AT PIR ION Practice COMPAS ION S V ision ( hat) W ProfitAbility R eturnAbility S ustainAbility V alues ( How ) Be B T E ETR D F R NT E IF E E IAT Make a D F R NCE IF E E 4/7/12 .
creating sustainable economic value means helping communities prosper while achieving profitable growth for the company.S. C. Sustaining Values: SC Johnson Public Report We create economic value We strive for environmental health We advance social progress Values Sustainability We believe our fundamental strength lies in our people. 4/7/12 . JOHNSON VALUEBASED MATRIX MIN D Contributing to the community well –being as well as sustaining and protecting the environment HEAR T SPIRI T Mission Promoting reusable shopping bags Base of the Pyramid To be a world leader in delivering innovative solutions to meet human needs through sustainability principles Vision For SC Johnson.
JetBlue Johnson & Johnson. The researchers found these “firms of endearment” to be highly profitable. Google. Southwest. Toyota. BMW. eBay. Best Buy. Costco. Timberland. Jordan's Furniture. Container Store. Caterpillar. Starbucks. L L Bean. Progressive Insurance. Commerce Bank. CarMax. They also found eight characteristics common to these firms. Honda. Whole Foods. REI. IKEA. New Balance. 4/7/12 . UPS. Patagonia.Companies Americans Love Amazon. Harley-Davidson. Trader Joe's. IDEO. Wegmans.
4/7/12 • • • • • • • . their employee training is longer. Their marketing costs are much lower than their peers while customer satisfaction and retention is much higher. and their employee turnover is lower They hire people who are passionate about customers They view suppliers as true partners who collaborate in improving productivity and quality and lowering costs They believe that their corporate culture is their greatest asset and primary source of competitive advantage.Characteristics of “Firms of Endearment” • They align the interests of all stakeholder groups Their executive salaries are relatively modest They operate an open door policy to reach top management Their employee compensation and benefits are high for the category.
Marketing the Mission to… 4/7/12 Consum ers Employ ees Channel Partners Sharehol ders .
0 HEART CUSTOMERORIENTED PEOPLE-VALUE SOCIAL PROGRESS Marketing 3.0 SPIRIT VALUES-DRIVEN ENVIRONMENTVALUE SUSTAINABILITY Where is your company now? •Where do you want it to be? •Why? •What would steps would you take? • 4/7/12 .Marketing 1.0 MIND PRODUCTCENTERED ECONOMICVALUE PROFITS MOVING TOWARD MARKETING 3.0 Marketing 2.
The Challenge • Re-moralize the market Re-localize the economy Re-capitalize the poor 4/7/12 • • .
Session 2. Increasing Your Branding Power 4/7/12 .
Almost 70% of the market capitalization of such brands as Nike and Prada lie in its intangibles. especially the brand. The former chairman of Quaker Oats said: “If the business were split up.The brand name may account for more than half of the brand value on the balance sheet. and you could have all the bricks and mortar—and I would fare better than you. and goodwill. I would take the brands.” 4/7/12 . trademarks.
Chinese gooseberry renamed kiwifruit. 4/7/12 Hog Island in the Bahamas renamed . Drumpf Towers? Alphonso D’Abruzzo renamed Alan Alda.What’s In a Name? Everything! Donald Trump’s family name is Dumpf.
no hassle car buying FedEx .driving Disney .caring • • • 4/7/12 • .Your Brand Needs to Own a Word • • • Mercedes .overnight Wal-Mart .low prices/good values Hallmark .family fun entertainment Saturn .engineering BMW .
A great brand triggers 4/7/12 emotions (Harley-Davidson). Amazon). • .A Brand Must be More Than a Name • A brand must trigger words or associations (features and benefits). • A brand should depict a process (McDonald’s.
Brand Asset Valuator Model Figure 2: BrandAsset ®Valuator Model ENERGIZED DIFFERENTIATION The brand’s point of difference Relates to margins and cultural currency How appropriate the brand is to you Relates to consideration and trial RELEVANCE How you regard the brand Relates to perceptions of quality and loyalty ESTEEM An intimate understanding of the brand Relates to awareness and consumer experience KNOWLEDGE BRAND STRENGTH Leading Indicator Future Growth Value Current Indicator Current Operating Value BRAND STATURE 4/7/12 .
LEADING B2B BRANDING COMPANIES DuPont •Siemens •Bosch •General Electric •Saint-Gobain •UPS •FedEx Click to edit Master subtitle style •Tentra Pak •Microsoft •Caterpillar •IBM •Daimler •Michelin •Tata Steel •Morgan Stanley • 4/7/12 .
metals. bricks.• Find a Way to Brand These Commodities Chicken • Cement Bricks “It is possible to brand sand. chemicals. wheat. corn grits. beef. aspirin. concrete. How to Brand Sand). bananas. …”(Sam Hill. apples. CAN YOU DESIGN NEW FEATURES FOR AN AUTO INSURANCE POLICY? 4/7/12 • .
” 4/7/12 .Creating genuine customer MyRate rewards Progressive Name Your Price value: lower risk drivers lets customers with lower rates. “ I don’t drive a lot of miles. I’m a safe driver. shouldn’t I pay less for car insurance?” “ I want an easier way to see how I can meet my insurance needs at a great price. Insurance their policy customize to fit their budget. and I’m not usually on the road late at night when accidents are most likely to happen. Since I’m less likely to be in an accident.
The Body Shop. Barnes and Noble bookstores. Ladies on . Harley’s Owner Groups: – • 4/7/12 HOGs have 250. Saturn. Ikea. lesbians. Lexus owners. BMW.000 members divided into 800 chapters: VietNam vets. Apple user groups. born again Christians.Build a Brand Community! • Examples: Harley Davidson. Porsche.
Develop a Memorable Brand Slogan • BA. “King of Beers” • • • WHAT DO YOU THINK OF THESE 4/7/12 SLOGANS . “The Right Choice” Budweiser. “The Natural Choice” AT&T. “The World’s Favorite Airline” American Express.
parents and seniors. dinner. as long as they broadly fit within the basic brand image. former McDonald’s CMO- ” teens. snack. weekend. No one communication alone tells the whole brand story Each communication provides a different insight into the brand 4/7/12 . It is positioned differently at breakfast.BRAND JOURNALISM Brand Positioning = Brand Journalism “Marketers should communicate different messages to different market segments at different times. young adults. -Larry Light. lunch. weekday. McDonalds is positioned differently in the minds of kids. with kids or on a business trip.
HYPOTHETICAL STARBUCKS BRAND POSITIONING BULLSEYE
Discerning Coffee Drinker
Coffee and the drinking experience is often unsatisfying
CONSUMER NEED STATE
Desire for better coffee and a better consumption experience
Values /Contemporary Personality / Character Points of Caring Thoughtful Difference Substantiators 24 hour (RTB) training of baristas Points of Parity Brand Mantr a Totally Triple integrated Filtrated Executional Propertieswater / system Visual Identity Siren Green &
Responsible, Locally involved Fairly Priced Stock option/ health benefits or baristas Relaxing, Rewarding moments Fresh, high quality coffee Varied, exotic Reach sensory Rich, Rewarding consumption Convenience, coffee drinks Coffee Experience Friendly experience service
CONSUM ER TAKEAW AY
Starbucks gives me the richest possible sensory experience drinking coffee
Local cafes, Fast food 4/7/12 & convenience
The Mercedes-Benz “Enduring Passion”
“The brand Mercedes-Benz is a brand icon, from its founding day till today.” 4040 4/7/12
Measure Your Brand Effectiveness
Customer perceived value Customer satisfaction Customer repeat purchase Customer advocacy
The 3i Model of Branding T GOOD Outdoorhe inspired F ootwear and Apparel Com pany •E ngaged Citizenship • E ironm nv ental Stewardship • Global Hum an R ights 4/7/12 .
SUSTAINABILITY AND SHAREHOLDER VALUE corporate sustainability and strong share price performance. 4/7/12 . 2008) More executives believe that the concept of sustainability is good for corporations in attracting consumers and employees and improving shareholder value. There is a link between Companies that put more emphasis on social and environmental impacts reported annual profit growth of 16% and share price growth of 45% while those from companies that did not put a lot of emphasis reported annual profit growth of only 7% and share price growth of only 12%. (Economist Intelligence.
possess good supply chain labor standards. The AIM: To encourage companies to improve their economic. planet.” Goldman Sachs Introduce the GS Sustain Focus List. and social impact on the society. which includes the list of companies with sustainable practices 4/7/12 .TRACKING SUSTAINABILITY Needed: indices that measure how well a company performs in the triple bottom line: profit. have positive relationship with all stakeholders. environmental. and counter bribery practices Dow Jones Sustainability Index Corporate sustainability as “a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic. environmental and social developments. protect universal human rights. and people. Company Approach FTSE4Good IndexGood companies work toward environmental sustainability.
The issue is to find a linkage of between sustainability. the company needs to provide tangible evidence that the practice of sustainability will improve shareholder value by creating a competitive advantage.Selling Sustainability to Investors To convince shareholders. and returnability Sustainabi lity Profitabilit y ? Returnabil ity THREE important metrics that can be quantified financially: Improved cost productivity Higher revenue from new market opportunities 4/7/12 corporate brand value Higher . profitability.
Ending the War Between Sales and Marketing • .Session 3.
Sales and Marketing Complaints • An Oracle salesperson told us. They call these things “leads”. Most of these leads aren’t followed up and go cold.” • Marketing says “We generate about 25.” 4/7/12 • The Head of Marketing had a different perspective. “We .000 leads a year for sales.” • “Marketing. “are the people who come up with these fancy value propositions that mean nothing to customers but do tell us how out of touch they are with business reality.” a senior airline sales manager told us. “Marketing sends us business cards they collect at trade shows from people who don’t need us and don’t want to see us.
Measure marketing effectiveness. 6.The Six Key Responsibilities of the CMO 1. 3. Strengthen the brands. 4. Improve marketing’s working relation with the other functions. 5. Drive new product development based on customer needs. 4/7/12 Source: Adapted from a McKinsey study . Gather meaningful customer insights. Utilize new marketing technology. 2.
Undefined Defined Aligned Integrate d 4/7/12 .Define the Existing Level of Relationship The integration of sales and marketing tends to progress through four distinct stages or levels of complexity.
Selling Funnel Customer Awarenes s Brand Awarenes s Brand Considera tion Brand Preferenc e Purchase Intention Purchase Loyalty Customer Advocacy Handoff M a r k e ti n g S a l e s 4/7/12 .
Integrating Customer Management Into the Sales Funnel Purchase Intention Purchase Loyalty Customer Advocacy Prospecti ng Qualifyin g Defining Needs Developi ng Solutions Proposal Preparati on/ Presentat ion Revision & Issue Resolution Contract Negotiati on Implementa tion 4/7/12 .
not value communication ©2009 4/7/12 Neil .The Alternative Business Model • Our mousetrap is one of many ways to kill mice • There’s not enough value in the mousetrap to differentiate us from competition • So the role of sales is to add value to our mousetrap • Sales becomes value creation.
Two Customer Value Types Value = Benefits – Cost • • • Consultative Customers Transactional Customers • • Have a problem Value your time Buy on expertise and trust • 4/7/12 ©2010 Neil Rackham Know what they want Treat you as a commodity Buy on price and convenienc .
Five years ago 10% were transaction al 10% were consultative $ TRANSACTIONA L • Cost focus CONSULTATIVE Convenience Decision • Don’t want to meet • ©2010 Neil Rackham 4/7/12 Most customers would pay a little extra for some Advice focus • Expertise decision • Want meetings • .
Customers Today More buy transactionally More want deeper consultative relationships $ $ $ TRANSACTIONA L • Cost focus CONSULTATIVE Convenience Decision • Don’t want to meet • ©2010 Neil Rackham 4/7/12 The middle is going away. Advice focus • Expertise decision • Want meetings • .
depending on what they “We’ll use our expertise to solve your problems and create custom solutions.” buying. for which we’ll charge you a premium. but don’t expect extras.” 4/7/12 O R ©2010 Neil Rackham . the value propositions customers want are: “We’ll offer you cheap and convenient products.Today’s Value Propositions are Today.
Competencies for Transactional Sales Branding Trade shows Direct Marketi ng Advertisin g Multicustomer Transaction al Sales events Call centers Internet 4/7/12 Campaign s ©2010 Neil Rackham .
Decide if you want your company to become market-driven or market-driving. Your CMO should be an active participant in the company’s strategic planning group. 4/7/12 • • • .• Where is Marketing Going? market and More companies are adopting a customer orientation 47% of Fortune 1000 firms have a CMO (80% have a CFO).
and Social Progress.MESSA GE Companies need to move from a shareholder to a stakeholder view of the enterprise. Companies need to practice the Triple Bottom-Line Model: Economic Value. The marketers then send offerings that touch the customer’s mind. Companies must better define their corporate social responsibilities. Marketing can contribute by serving more actively in developing the company’s plans for long run profitable growth. heart. develop and human spirit. Environmental Health. 4/7/12 . vision and values. Marketers get their clues from how the company defines its mission.
“Within five years. if you run your business in the same way as you do now. you’re going to be out of business.” Philip Kotler Click to edit Master subtitle style 4/7/12 .
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